Home   >   NEWS & VIEWS   >   News

  • Hike in import duty expected to boost domestic processing of cashews

    Jun 13th, 2019

    The Centre’s decision to hike the minimum import price (MIP) for whole and broken cashew has brought cheers to the cashew processing sector. The stakeholders observed that low-quality cashew kernel shipments from Africa and ASEAN countries had hit the domestic industry.

    “We are happy with the DGFT notification which was long overdue as low-priced cashew kernel imports impacted the local production. The origin countries impose taxes on export of raw cashew, while they incentivise kernel exports. This has resulted in dumping of cheap and low-quality nuts into India, making the domestic industry uncompetitive,” Rahul Kamath, past president of Karnataka Cashew Manufacturers Association, told BusinessLine.

    The Directorate General of Foreign Trade (DGFT) hiked the MIP for broken cashew to ₹680/kg from ₹288/kg. The whole cashew price has been enhanced to ₹720/kg from ₹400/kg.

    According to RK Bhoodes, Chairman, Cashew Export Promotion Council, low- quality kernels from Vietnam, Mozambique, Ivory Cost are being dumped into the domestic market by partly evading the customs duty. This has affected genuine processors, who are finding difficulties in selling their products, as the domestic processing becomes unviable. This has led to closure of many cashew processing units.

    “We are heavily dependent on imports as the sector needs 16 lakh tonnes of raw cashew for processing. Of which, 8.17 lakh tonnes was produced in the country,” he said.

    The MIP was introduced in 2013 at the then market price. Later, the market price has gone up to 2-2.5 times, touching ₹700-₹800/kg for whole cashew and ₹650-₹700 for broken cashew. However, some importers misused provisions under various FTA’s and shipped large volumes of plain cashew kernels (mostly brokens), which are of inferior quality. The absence of a domestic market was the reason for origin countries to sell their products in the Indian market at throwaway prices.

    These countries are providing 20-25 per cent incentives to exports of finished and semi-finished kernels. Taking advantage of this, they are dumping kernels as they have an advantage of 45 per cent of the costing compared to domestic processing. Besides, there were instances of wrong declaration on cashew kernel imports as roasted cashew and animal feeds, he said.

    “It was the cashew workers who initially started the agitation against cheap kernel imports as it led to the closure of several processing units,” said K Rajesh, Convenor, Kerala Cashew Industry Joint Protest Council.

    The government’s decision to hike the MIP is expected to revive the domestic cashew processing sector and thereby bring in more job opportunities. He also requested the government to extend a revival package to open the closed processing units.

    India currently produces around 3.5 lakh tonnes of cashew kernels. The production and import of raw cashew is around 8 lakh tonnes and 9 lakh tonnes, respectively. The country exported 84,352 tonnes of cashew kernels in 2017-18 as against 82,302 tonne during the previous year. In value terms, exports went up almost 18 per cent to $911 million in 2017-18.